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U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

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Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#61

Post by intricatedetail »

Tuna-Fish wrote: post #7
prepend wrote: post #4

Earlier quoted context omitted.

So the unknown wallet was actually the DoJ taking control? I was wondering what they wanted the courts to do. I’m not sure after reading the article. Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? It’s interesting to think about how to do this. It must be hard to keep an agent from recording the key, and using it 50 years later or something. Theoretical…

> Are they just planning on destroying the wallet key, kind of like if they just burned a billion in seized cash? Why on earth would they do that? Under US law, law enforcement agencies can keep a portion of the proceeds from the sale of any goods they legally seize. This is a massive windfall for them.

Sounds like nice stash to fund Contras in some peaceful country.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#62

Post by matt_kantor »

monokh wrote: post #14
laurent92 wrote: post #12

Earlier quoted context omitted.

Same question: Ok we may not be able to brute-force it today for less than $1bn, but tomorrow, may a vulnerability in the algorithm make it possible to regenerate the private key?

If there is ever such a vulnerability in bitcoin that allows you to either - Generate private keys at a rate in which you will be able to produce it in a reasonable time or - Outright reverse engineer the private key from the public key or other metadata Then Bitcoin is broken and that 1bn is worth next to nothing.

If someone discovers such a vulnerability and is able to cash out before it's publicized then they'll make a lot of money anyway.

They could also short Bitcoin before intentionally crashing it.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#63

Post by duxup »

londons_explore wrote: post #39

This gives the US government a lot of power over bitcoin... That both gives the government an incentive to let bitcoin thrive (to protect it's holdings), but also an opportunity to substantially manipulate bitcoins market price, possibly down to nearly zero. Or the keys to these bitcoin will sit idly in a filing cabinet forever...

Is $1B in bitcoins enough to manipulate the price more than say ... just $1B in cash, something the government could somewhat easily just have if it wanted to do so?

I feel like if they wanted to, they'd already be playing that game.

It's not out of the realm of possibility this would give an actor more of an opportunity to do so, but it hardly seems required if the motivation was already there. I think it would already be happening if that was the case.

In the meantime the gov has auctioned off their bitcoins like they do other property pretty often.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#64

Post by drchopchop »

seibelj wrote: post #43
londons_explore wrote: post #39

This gives the US government a lot of power over bitcoin... That both gives the government an incentive to let bitcoin thrive (to protect it's holdings), but also an opportunity to substantially manipulate bitcoins market price, possibly down to nearly zero. Or the keys to these bitcoin will sit idly in a filing cabinet forever...

Despite loads of blockchain haters on HN, the government recognizes that bitcoin has value and has formal processes to seize, custody, and auction off the assets to add money to the federal treasury.

I'm sure they'd also have processes to seize Beanie Babies or Pokemon cards, if they were currently trading for $15,000 per unit on eBay

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#65

Post by cloudhead »

laurent92 wrote: post #12
prepend wrote: post #8

Earlier quoted context omitted.

How would you verify that the private key is unknown? I guess an auditable process in a black box to confirm the key is ever stored. But with $1B at stake, there’s some serious incentive to measure electrical output or something to snoop the key. I guess you could send to a random address, but there’s an infinitesimal chance that someone in the future generates a key with that address, right?

Same question: Ok we may not be able to brute-force it today for less than $1bn, but tomorrow, may a vulnerability in the algorithm make it possible to regenerate the private key?

Keep in mind the receiving public key is not revealed when money is sent to an address, only its hash. So you'd have to "reverse" SHA256 first.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#66

Post by duxup »

seibelj wrote: post #56
tyre wrote: post #54

Earlier quoted context omitted.

I simultaneously believe blockchain vastly underperfoms its promises and is a net waste of so much investment (human talent + time + capital) and also believe that bitcoin can be exchanged for real US dollars.

You honestly don't see one valuable use-case for bitcoin? And if serious mainstream investors start buying it as an inflation hedge, they are just idiots?

Is that a valuable use case? Just another instrument to try to use as a hedge?

That really doesn't seem like what Bitcoin or the community is all about.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#67

Post by shiado »

What's fascinating is that it is the view of the state that the creation of a hard fork, which is the creation of new and previously non-existing coins according to how Bitcoin is taxed by the IRS, is considered to be the proceeds of crime. It is philosophically notable that a piece of property can come into existence and immediately be considered the proceeds of crime in this way.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#68

Post by prvc »

macksd wrote: post #49
ballenf wrote: post #37

Earlier quoted context omitted.

The regular reply to that strength is usually the rubber hose threat. Which is pretty much what happened here it seems with the person who had control of the private key in custody of the government.

This is the XKCD you're looking for: https://xkcd.com/538/

What does that have to do with a rubber hose?

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#69

Post by aazaa »

I find it extremely amusing that the US government has over the last several years become one of the world's largest traders in bitcoin. It's not quite the path many were predicting back in the early 2010s, but Bitcoin has been full of surprises.

If history is any guide, the bitcoin will be auctioned off sooner rather than later.

Re: U.S. Feds Seized Nearly $1B in Bitcoin from Wallet Linked to Silk Road

#70

Post by seibelj »

duxup wrote: post #66
seibelj wrote: post #56

Earlier quoted context omitted.

You honestly don't see one valuable use-case for bitcoin? And if serious mainstream investors start buying it as an inflation hedge, they are just idiots?

Is that a valuable use case? Just another instrument to try to use as a hedge? That really doesn't seem like what Bitcoin or the community is all about.

You can't win arguing about crypto on HN. I list 50 use-cases, everyone says a centralized DB can do it better. I say the most crucial one - inflation hedge - and you say "What, that's it?" You can lead a horse to water, but you can't make it drink.
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